A survey by a Mandatory Provident Fund provider shows that Hongkongers' readiness for retirement has dropped this year compared with 2010.

The retirement survey, designed by Fidelity Worldwide Investment, shows the Retirement Readiness Index of Hongkongers this year has slipped and expectations and attitudes towards retirement are not realistic enough.

Fidelity says the survey interviewed 857 men and women in Hong Kong, aged 25-65, who are the financial decision-makers of their households, in April and May.

It says the aim is to understand their attitudes and approaches towards retirement and investment, and measure the usage penetration of pension schemes and the monthly contributions.

It also aims to find out about Hongkongers' awareness and attitude towards the forthcoming Employee's Choice Arrangement.

The report reveals a widening gap between the retirement amount needed and that to be achieved by Hongkongers, from a shortfall of HK$1 million in 2010 to HK$1.4 million this year, translating to a decrease of Retirement Readiness Index from 54.2 per cent to 50.2 per cent. In order to meet the savings shortfall, a majority of people (75 per cent) would prefer saving or investing more, followed by choosing to work after retirement (32 per cent). About 28 per cent would even choose to retire at a later age, the survey shows.

Overall, there is a strong expectation of later retirement, with 40 per cent of respondents expecting to need to work until the age of 65 or beyond.

Some 48 per cent of respondents expect their retirement savings to be sufficient for retirement for less than 20 years.

K.P. Luk, head of institutional business, Hong Kong, of Fidelity Worldwide Investment, says the findings indicate that Hongkongers are aware that their retirement preparations are insufficient, particularly in light of inflation. However, postponing one's retirement years and working after retirement are not practical solutions.

'With the continuing gap between expectations and the reality of retirement income needs, Hong Kong workers face an increasingly pressing need to manage their pension scheme more effectively,' Luk says.

'In order to meet their retirement target, Hong Kong people need to start planning early and understand clearly their retirement goals.

'Knowing their target will help to achieve their retirement income goals, but this can only be done with proper awareness of one's potential yield from maximising pensions and savings portfolios,' Luk says.